Clark County commercial and residential market tilts toward recovery
While other sectors of the economy continue to struggle, it seems that real estate, both commercial and residential, is finally beginning to stabilize after months of declines, according to market experts contacted by the VBJ last week.
At least in downtown Vancouver, that is.
And though modest market stabilization even in a small corner of the regional market is a welcome sign, broker Mike Lamb of Windermere Real Estate/Stellar Group in Vancouver cautioned that the recovery might not look like investors expect.
"The growth of the mid-2000s was an aberration as far as Clark County real estate goes," Lamb said of the region's residential market. "Our market is generally very stable with slow growth and that's what I expect to see in the future."
As for that future, at least one downtown Vancouver commercial property owner, Phil Schofield of newly-formed family-owned Schofield Group LLC, says his company is in it for the long haul.
Schofield's family has been in the real estate business in downtown Vancouver since his great-grandmother, Mary Schofield, bought properties in the 1870s. Today, the recently reorganized real estate management company owns and manages several Main Street properties from Eighth Street to 21st Street in Vancouver.
"I am in the fortunate position of having no vacancies," Schofield said. "This isn't very common in Vancouver."
However, Schofield's tenants, ranging from bars to appliance stores to foster child services, have not been immune from the economic crunch. But since their properties are owned outright, according to Schofield, the management group has been able to attract and retain a diverse range of tenants such as First Independent Bank, beverage retailer By the Bottle and Tip Top Tavern with competitive lease rates.
"Because we are not being squeezed by the bank, we've been able to offer many of our tenants a better deal," he said.
When Laura Osburn of mental health nonprofit Family Solutions inquired about leasing a Schofield-owned space at 1014 Main St. in Vancouver earlier this month, she said she was pleasantly surprised. "We thought the building would be much more expensive," she said.
Osburn's organization recently signed a lease on an 11,000 square-foot-space in a deal contingent upon Family Solution's successful completion of a city Human Services permit process.
Schofield-owned properties aren't the only apparent good deals in town, however.
On June 14, the Vancouver City Council approved the purchase of a five-story building at 415 W. Sixth St. for $18.5 million, nearly half its $32.9 million appraised value. And while brokers like Lamb welcomed the sale of the Bank of America-owned property, originally built for The Columbian newspaper, he said it was one more sign that the recovery in the downtown commercial real estate market still had a long way to go.
"City Hall moving its offices is going to be an anomaly," he said.
One economic factor holding down both the residential and commercial real estate market is the region's continuing stagnant job growth.
Clark County's unemployment rate for May remained virtually unchanged from the previous month at 13 percent – troubling news despite the creation of 700 temporary census and after-school tutoring positions.
The county's jobless numbers still tower over Washington state's (9.3 percent) as well as the U.S. average (9.7 percent).
"Southwest Washington has hit bottom, but has yet to turn the corner," said Scott Bailey, regional economist at the Washington Employment Security Department in Vancouver. "With the national economy likely to slow in the coming months, any substantial improvement remains unlikely this year."
With companies still reluctant to hire, demand for office space has slowed, helping to push the county's commercial vacancy rate up slightly to 18.64 percent after six months of slow, but steady declines, according to a market report compiled by Adam Roselli of Eric Fuller and Associates in Vancouver.
On the residential side, Lamb believed 2010 would be the best real estate year since the housing market's high water mark of 2007. However, given the price declines of the last two-and-a-half-years, that might not be saying much, he admitted.
In April, due to the looming deadline of the popular federal First Time Homebuyer's Tax Credit program, recorded sales in Clark County beat the previous year by 36.8 percent and rocketed past the doldrums of April 2008 by 60.6 percent, according to market figures provided by Lamb.
Without the tax credit boosting home sales, market activity has slowed down measurably, according to Lamb. "I don't expect to see a lot of huge changes for a while, which is good," he said.
